Canada's TMX sees regulation driving any M&A

TORONTO (Reuters) - TMX Group Ltd X.TO will look closely at any regulatory changes that the United States or other jurisdictions put into place as it sizes up acquisitions during and after the exchange industry's current rough patch, TMX's chief executive said on Wednesday.

"There could be significant regulatory changes in terms of how multi-marketplace environments continue to operate that could very much sway us one way or another as we look at other markets to operate exchanges in," said Tom Kloet, CEO of TMX, the Toronto Stock Exchange's parent.

The exchange operator, which controls more than 80 percent of Canadian stock trading after its C$3.8 billion ($3.81 billion) takeover by a financial consortium, has made no secret of wanting to expand globally. The takeover by the Maple Group took effect in September.

In an interview with Reuters, Kloet said the current slowdown in trading could make potential takeover targets more attractive.

"You can make an argument that because volumes are low, certain things might be cheaper today than they would be in other market environments," he said, adding that the industry was going through "a bit of a trough".

Trading volumes at exchanges around the world have been hurt by the European debt crisis and by anxiety over the "fiscal cliff" - automatic U.S. tax increases and spending cuts that will go into effect if Washington fails to reach a fiscal agreement. Economists fear that could trigger recession.

At the same time, the global securities industry is also in the middle of a massive regulatory overhaul, with governments drafting new laws that are changing the exchanges landscape.

"It's the biggest period of regulatory change that I've ever experienced," said Kloet, a 30-year veteran of the industry.
Continued...